Bad data is comparable to disinformation, which leads entrepreneurs to wrong conclusions, undesired outcomes, or overspent the money unconsciously. Check out this video to see what has been putting your business in danger yet you may not be aware of.
Time stamped Show Notes:
Topic: Why Bad Data Is Worse Than No Data
We’ve landed a dream customer recently. When we took over and looked into the account, we found a common mistake that we’ve seen happened among small businesses repeatedly, which is, the book is inconsistent. Sometimes they do the book using accrual basis, and the other times they do it on a cash basis. It skews the numbers because the revenue and expenses are not lining up.
[00:53] A real-life example that how bad data hurts your business
The situation is that they have a vendor who always sends in invoices late, and theydon’t accrual the expenses for that. Things you bought in January, don’t show up in Feb, in Mar, and in April – which makes January revenue/profit a much better than it actually is. So it gives you an impression that you’re doing well, and probably will overspend your money or make the wrong business decisions that can distort your business secretly.
[01:20] Quick fix
If you plan to make an informed decision based on your financial statement. Make sure you are doing your book on the accrual basis. More importantly, the key is to make sure your book is consistent, and if there is an issue – be sure you know what the issue is. Talk to your accountant and start making a decision out of your numbers.
Until next time – we hope your book is on the accural basis and that you are growing profitably!